What are the key questions faced by Canadian energy policymakers and what are the desirable directions for energy policy, especiaIIy as it applies to the hydrocarbon sector? In highlighting some of those questions and proposing some policy directions, I wish to argue in thls paper that the issues addressed are interrelated, that this inter-relationship can and should be exploited by policy-makers, and that, while government intervention seems inevitable, the form of the intervention is subject to significant choice.The three issues discussed here will be of great importance to Canada's energy economy over the next five to ten years: linkages between energy and the environment, the time horizon of policy, and the security of energy supplies. In the closing section of the discussion I will emphasize common aspects of poSSible policy responses to these questions.The discussion is obviously not intended to be comprehensive in relation to all of the issues relevant to Canada's complex energy sector. Nor is it intended to be theoreticaIIy rigourous -the arguments presented below do not seek to identify optimal policy moves. It is rather an exercise in political economy, in which the tools of economics are applied to real-world policy questions, Energy Studies Review VoL 3, No.